All of the Following Are Correct Except

question 22

Multiple Choice

All of the following are correct except:

• A) Unlike debt and preferred stock, cash flows from common equity are not fixed or known beforehand and their risk is harder to evaluate.
• B) Firms have three sources of common equity, retained earnings, treasury stock, and new stock issues, and thus two costs of common equity.
• C) From the shareholders' perspective, the opportunity cost of retained earnings is the return the shareholders could earn by investing the funds in assets whose risk is similar to that of the firm.
• D) If the firm cannot invest its retained earnings to achieve a sufficient risk-adjusted return, shareholders would be better off receiving 100 percent of its net income as dividends.

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Definitions:

Neonate Stage

The initial period of infancy, typically regarding the first four weeks of life outside the womb, characterized by rapid changes and adjustments in the newborn.

Prenatal Development

Development from conception to birth.

Zygote

Cell that results from the union of a sperm and an ovum.

Chromosome

A threadlike structure of nucleic acids and protein found in the nucleus of most living cells, carrying genetic information in the form of genes.